[gyardley]

I never understood why bodies like the FTC rely on 'independent, third-party audits' for enforcement, since they end up making the entire action pointless.

The independent third-party auditor will give Facebook a stamp of approval, both in the next 180 days and every two years thereafter, because the independent third-party auditor wants the repeat business.

Same thing goes for any regulation that depends on a third party, really. I mean, over the last six years how often is a 409a valuation not to the board's liking? Somehow, magically, the auditors collect their fees from the company and then independently deliver an acceptable answer.

Might as well not have the regulations - or just fine the company something meaningful - instead of engaging in this goofy kabuki theatre.

[JonnieCache]

Don't the credit rating agencies work the same way? The companies being rated pay the agencies, not the companies that want to know the rating.

[chalst]

They do. Their value is unclear.

Accountants supposedly are employed by shareholders, but in practice are employed by executives. This makes auditing problematic, but it does have some value. The bigger problem there is the big four's oligopoly: they are too big to fail.

[JonnieCache]

Thought so.

Why do people insist on inventing wacky conspiracy theories when the scam is right there in front of them?

[philwelch]

How are the big four all "too big to fail" when not too long ago they were the big five?

[chalst]

See, e.g., the discussion in http://www.economist.com/node/3984019

Break-up of the big four has been proposed, I see in this mornings Financial Times: http://www.ft.com/intl/cms/s/0/a4f58dba-1a89-11e1-ae4e-00144...

[protomyth]

Quite a lot of work goes under contract from the government and auditors or "program evaluators" are pretty common. A lot of grant programs on the social service and education side have a employee as a grant officer but are pretty much run by outside contractors.

Not saying it is good or bad (kind of depends on who the contracting company is), but it is very common and pretty much standard business for the government.

[flyt]

Same for the PCI compliance process. Auditors are on your side and want you to pass, so they'll bend in all sorts of ways to accept bad practice as "acceptable at this company"

[anigbrowl]

Arthur Anderson thought that too, which is how we got SOX.